Mediator to hear evidence in MLBAM fantasy sports dispute

A Missouri mediator is scheduled this week to hear a dispute between MLB Advanced
Media and St. Louis-based CDM Fantasy Sports that could have far-reaching consequences
in the fantasy sports industry.

CDM filed suit against MLBAM in February, seeking a declaratory judgment allowing
it to use player names and statistics without fear of violating baseballs
intellectual property rights. MLBAM asserts that the commercial use of the player
names without a license infringes upon their rights.

The sides were unable to reach a license agreement last winter, with CDM saying
MLBAMs only offer was to assume CDMs client base in exchange for a
10 percent commission.

The non-binding mediation hearing before attorney Richard Sher, set for Tuesday
in Clayton, Mo., represents the first movement on the case beyond legal filings.

This is still about who owns bare statistics associated with player names,
said Charlie Wiegert, CDM executive vice president. There is a very fundamental
issue at play here, and we obviously believe these things belong in the public
domain.

MLBAM officials declined comment, citing the ongoing litigation. MLBAM President
Bob Bowman previously has said a desire exists to reduce third-party licenses
in order to move fantasy sports efficiently into a new era that includes wireless
applications, options for more casual play and video highlights.

The case is expected to have huge ramifications on the fantasy sports industry
regardless of its outcome. If MLBAM prevails, there is a strong likelihood that
most fantasy sports companies not directly aligned with major sports leagues would
soon go out of business.

There is a chance the mediation hearing, not uncommon as a first step for cases
filed in the U.S. District Courts Eastern Division of Missouri, could get
pushed back to October because of scheduling conflicts.

The MLB Players Association, now aligned with MLBAM in a five-year, $50 million
partnership, also has joined the lawsuit, believing CDMs activities could
pose a commercial threat.

After a long and not dissimilar legal dispute, CDM now holds a license with the
NFL Players Association to operate football fantasy leagues. CDM pays a royalty
rate of 7.5 percent to the union.

Sher, mutually selected by CDM and MLBAM, is a well-known figure in Midwest legal
circles for being an active advocate of mediation and alternative dispute resolution.

Wiegert said the dispute with MLBAM has had a predictably negative effect on his
business as CDM continues to operate baseball games without MLBAM approval. The
company claims about 35,000 players in its various baseball fantasy leagues, down
nearly 20 percent from a year ago.

Despite Wiegerts frustration with MLBAM, he said he would be open to a purchase
offer for CDM. Gannett Co., which has used CDM extensively to run fantasy leagues
through USA Today, neared a purchase of the company last year, but backed off
as the legal dispute with MLBAM heightened, Wiegert said.